BUDGET

BUDGET, FINANCE & INVESTMENT COMMITTEE

June 25, 2002 5:30 P.M. Courthouse

MINUTES:

Members Present: Others Present: Others Present: Others Present:

Comm. Joyce Ealy Mary Schneider Elaine Lowe Joe McKenzie

Comm. Paul Johnson Truman Jones Jeff Sandvig Bryan Brooks

Comm. Tina Jones Virgil Gammon Bob Shupe Paul Long

Comm. Robert Peay Robert Asbury Ken Halliburton Elaine Cawthon

Comm. Steve Sandlin Judge Donna Scott Susan Boney

Comm. Dwight Throneberry Tom Haynes Brian Robertson

Comm. Jimmy Evans, Chair. Steve Smith Sue Cain

Chairman Evans presided and called the meeting to order with all members being present at that time.

GENERAL FUND 2001-2002 BUDGET AMENDMENTS

DRUG COURT:

Mary Schneider, Drug Court Coordinator, requested approval of the following budget transfer to provide enough funding for the Communications Account for the remainder of the year:

From: 101-53200-205 – Employee & Dependent Insurance - $400

To: 101-53200-307 – Communications - $400

Comm. Sandlin moved, seconded by Comm. Peay to approve the budget transfer as requested.

The motion passed unanimously by roll call vote.

AMBULANCE SERVICE:

Elaine Lowe requested approval of the following budget transfer for the Ambulance Service to provide adequate funding for the remainder of the year for the Overtime Account:

From: 101-55130-133 – Paraprofessionals - $6,000

To: 101-55130-187 – Overtime Pay - $6,000

Comm. Jones moved, seconded by Comm. Throneberry to approve the budget amendment for the Overtime Pay as requested.

The motion passed by roll call vote with Comm. Sandlin voting “no”.

Elaine Lowe requested approval of the following budget transfers to provide adequate funding for the Communications Account and the Postal Charges Account for the remainder of the fiscal year:

From: 101-55130-790 – Other Equipment - $ 3,400

101-55130-718 – Motor Vehicles - 1,500

101-55130-335 – Maintenance/Repair Buildings - 2,000

To: 101-55130-307 – Communications - $ 6,900

From: 101-55130-335 – Maintenance/Repair Buildings - 2,000

To: 101-55130-348 – Postal Charges - 2,000

Comm. Sandlin moved, seconded by Comm. Peay to approve the budget transfers as requested.

Budget Minutes June 25, 2002 Page Two

The motion passed unanimously by roll call vote.

SHERIFF’S DEPARTMENT:

Col. Virgil Gammon requested approval of the following budget amendment to cover estimated costs for the Overtime Pay Account for the remainder of the year:

From: 101-54110-169 – Sheriff Part Time Personnel - $ 2,000

101-54210-169 – Jail Part Time Personnel - 2,000

101-54210-187 – Jail Overtime Pay - 5,000

101-54210-189 – Jail Other Salaries & Wages - 9,800

101-54110-189 – Sheriff Other Salaries & Wages - 3,150

To: 101-54110-187 – Sheriff Overtime Pay - $ 21,950

Comm. Peay explained that of the $21,950, $17,000 was for time worked at the Gum Road area protecting homes that were damaged and destroyed by the tornado.

Comm. Peay moved, seconded by Comm. P. Johnson to approve the transfer as requested for the Sheriff Department Overtime Pay Account.

The motion passed by roll call vote with Comm. Sandlin voting “no”.

Col. Gammon requested approval of the following budget amendment to cover any emergencies in the Maintenance and Repair of Building Account, to cover unexpected medical expenses and utilities for the remainder of the year:

From: 101-54210-399 – Jail Other Contracted Services - $1,000

101-54110-425 – Sheriff Gasoline - 1,000

101-54110-719 – Sheriff Office Equipment - 1,000

To: 101-54210-335 – Jail Maintenance/Repair Buildings - $ 3,000

From: 101-54110-425 – Sheriff Gasoline - $ 2,000

To: 101-54210-336 – Jail Maintenance/Repair Equipment - 2,000

From: 101-54110-425 – Sheriff Gasoline - $ 1,000

101-54110-437 – Sheriff Periodicals - 4,000

To: 101-54210-340 – Jail Medical & Dental Services - $ 5,000

From: 101-54110-338 – Sheriff Maintenance/Repair Vehicles - $ 5,000

To: 101-54210-452 – Jail Utilities - $ 5,000

Comm. Sandlin moved, seconded by Comm. Jones to approve the budget amendments for the Sheriff’s Department as requested.

The motion passed unanimously by roll call vote.

CONTRACT AGREEMENT WITH TENNESSEE DEPARTMENT OF CHILDREN’S SERVICES:

Judge Donna Scott requested approval of a Grant Agreement between Rutherford County Juvenile Court and the State of Tennessee Department of Children’s Services to provide educational and therapeutic services to youth through the Rutherford County Teen Learning Center. The maximum liability of the State under the grant is not to exceed $617,095. Judge Scott advised this was pass through money from the State.

Budget Minutes June 25, 2002 Page Three

Comm. Sandlin moved, seconded by Comm. Jones to approve the Grant Agreement between Rutherford County Juvenile Court and the State of Tennessee Department of Children’s Services as requested.

The motion passed unanimously by roll call vote.

APPROVE GRANT APPLICATION FROM THE TENNESSEE EMERGENCY MANAGEMENT AGENCY:

Mr. Steve Smith, Emergency Management Director, requested approval of a grant application for a Fiscal Year 2002 State Domestic Preparedness Program sub-grant in the amount of $125,000 from the Tennessee Emergency Management Agency. Mr. Smith advised the grant is 100% federally funded and no match is required.

Comm. Peay moved, seconded by Comm. Ealy to approve the grant application from the Tennessee Emergency Management Agency in the amount of $125,000, with the grant being 100% federally funded.

The motion passed unanimously by roll call vote.

REQUEST FROM AMERICAN NATIONAL RED CROSS:

Mr. Tom Haynes, Chapter Chairman of Heart of Tennessee Chapter of the American National Red Cross, addressed the committee requesting a property tax exemption for the new facility that was purchased in December, 2000. He advised the Red Cross is and has always been eligible for exemption from property taxes, and they inadvertently failed to file its application for exemption for 2001 and consequently received a tax bill for 2001.

Mr. Haynes requested a grant from the County in the amount of $5,602.12, which is the exact amount of the taxes through June. He advised he would immediately endorse the payment over to the County Trustee to satisfy the property tax bill.

Comm. Jones moved, seconded by Comm. Peay to approve the grant in the amount of $5,602.12 from the General Fund to the American National Red Cross to cover the 2001 property taxes.

The Finance Director advised the payment would go to the American National Red Cross and would be endorsed over to the Trustee. The payment would then be split among all of the funds based on the property tax rate.

Mr. Long suggested the funds be transferred from Account 101-58900-505, Judgments, to Account 101-58900-316, Contributions. He stated since this is a contribution to a non-profit organization, it would still need to go to the full commission.

Following discussion, the motion to approve a grant in the amount of $5,602.12 to the American National Red Cross to cover the 2001 property taxes passed by roll call vote with Comm. Sandlin voting “pass”.

2002-2003 RENEWAL WITH WILLIAM C. BEELER & COMPANY AS THIRD PARTY ADMINISTRATOR FOR HEALTH INSURANCE:

Mr. Bob Shupe, Employee Security Planning, addressed the committee regarding the 2002-2003 renewal with William C. Beeler & Company as the third party administrator for the County’s self-insured health insurance plan.

Mr. Shupe advised at the last Budget Committee meeting the re-insurance was approved, as well as the organ transplant carrier. He stated the re-insurance quotes are through W. C. Beeler, and the coverage is provided as a package.

Budget Minutes June 25, 2002 Page Four

Comm. P. Johnson advised the intent of his motion at the Insurance Committee was to approve the entire package.

Mr. Long advised it was not recorded in the Insurance Committee minutes that way, and therefore was not presented at the last Budget Committee meeting. He stated it had not formally been approved at the County Commission meeting on June 13.

Mr. Shupe advised the current fee per employee is $10.75 per month, and that is being increased to $11.65.

Mr. Long advised the total cost for W. C. Beeler’s fee would be $384,450 annually. He explained this is an increase of $29,700.

Mr. Shupe advised the fee included everything but the PPO fee and the utilization review fee. Mr. Shupe advised the fee was market compatible.

Comm. P. Johnson stated he believed it was the general consensus of the Insurance Committee that it was a package deal.

The committee discussed what might happen if the fee increase for Beeler was not approved.

Following discussion, Comm. P. Johnson moved, seconded by Comm. Ealy to approve the renewal with the William C. Beeler and Company as the third party administrator for the self-funded health insurance with the fee increase for William C. Beeler from $10.75 per employee per month to $11.65 per employee per month, the PPO rate to increase from $4.55 to $4.80, and the UR/Precert rate to increase from $1.70 to $2.00.

Comm. Sandlin amended the motion to approve William C. Beeler as the third party administrator for the self-funded health insurance at the current fee and not at the increased fee.

With no second, Comm. Sandlin withdrew the amendment to the motion for discussion.

Comm. Jones asked if the amendment passed, would it put any employees at risk?

Mr. Long stated he believed it would be the County’s responsibility to notify Beeler that the increased fee was not approved. He stated Beeler would then be in a position to respond.

Mr. Shupe stated he did not believe it would be in Beeler’s best interest to walk away from Rutherford County. He advised Mr. Beeler was at the Insurance Committee meeting. He explained in the past, the proposal has been addressed as a unit. He stated the County could not purchase its own re-insurance. He stated it was his understanding at the Insurance Committee that the motion was to approve renewing with Beeler, as well as the re-insurance carrier and the organ transplant carrier.

Comm. P. Johnson stated even with the fee increase, the grand total is $104,000 less than the previous year.

Mr. Shupe explained the total went down because the re-insurer’s cost was less than the year before.

Mr. Shupe stated he believed there had been an assumption made on the part of Beeler. He stated the County Commission approved everything else at the meeting on June 13, and Beeler was notified of that. He stated Beeler has probably taken action to make sure the renewal has been processed. He stated Beeler has probably assumed the renewal is complete. He stated based on that, it would probably not be a good decision to approve Comm. Sandlin’s amendment. However, if the committee decided not to approve the fee increase, Mr. Shupe stated he did not believe Beeler could afford to make an issue of it.

Budget Minutes June 25, 2002 Page Five

Mr. Shupe advised Beeler had no control over the PPO rate and the UR/Precert rate. He stated to his knowledge, these costs are not negotiable.

The Finance Director advised those costs were shared at the Insurance Committee and discussed, but he stated he did not believe those increases have been acted on by the Budget Committee, as well.

The Finance Director asked Mr. Shupe if the renewal could be approved as they were presented at the Insurance Committee subject to additional negotiations with Beeler regarding their fee?

Comm. Sandlin stated he wanted to totally pull out the $29,700 increase. He stated if nothing could be done about the PPO rate increase and the UR/Precert rate, he would agree to that.

Comm. P. Johnson stated he did not agree with pulling out the $29,700.

Following discussion, Comm. Sandlin amended the motion, seconded by Comm. Jones to approve the renewal with William C. Beeler as the third party administrator for the self-funded health insurance plan with the PPO rate to increase from $4.55 to $4.80 and the UR/Precert rate to increase from $1.70 to $2.00, but that the administrative fee of $10.75 remain the same.

Comm. Jones stated this could be a negotiating period. She stated the county has been a very good customer for Beeler.

Following discussion the amendment to the motion failed by roll call vote with Commissioners Jones, Sandlin, and Evans voting “yes”, and Commissioners Ealy, P. Johnson, Peay, and Throneberry voting “no”.

The original motion to approve William C. Beeler as the third party administrator for the self-funded health insurance plan with the administrative fee to increase from $10.75 to $11.65, the PPO rate to increase from $4.55 to $4.80, and the UR/Precert rate to increase from $1.70 to $2.00 passed by roll call vote with Commissioners Ealy, P. Johnson, Peay, and Throneberry voting “yes” and Commissioners Jones, Sandlin, and Evans voting “no”.

2002-2003 PROPERTY & CASUALTY INSURANCE:

Mr. Shupe distributed an analysis of the 2002/2003 Property & Casualty Renewal quotes received. Mr. Shupe advised the numbers have just been received, and the Insurance Committee has not reviewed them. He stated he has been handling renewals for the past three weeks ranging anywhere from 25% increase to 103% increase. He stated insurance companies are taking a very serious look at specific types of markets such as public entities, nursing homes, and utilities and defining certain classes. They are either not writing insurance for them or offering renewals that are so high that it is unaffordable.

Mr. Shupe reported currently the county has insured $518,940,943 in property with a $10,000 deductible per occurrence and a premium of $287,786.

Under renewal 1, Travelers offered an insurance limit of $200,000,000 with a $25,000 deductible per occurrence for a premium of $418,433. This is an increase of 45% on the premium.

Under renewal 1a, Travelers offered an insurance limit of $200,000,000 with a $100,000 deductible for a premium of $368,646, which is a 28% increase.

Under renewal 2, Travelers offered an insurance limit of $100,000,000 with a $25,000 deductible for a premium of $404,805, which is a 41% increase.

Under renewal 2a, Travelers offered an insurance limit of $100,000,000 with a $100,000 deductible for a premium of $354,260, which is a 23% increase.

Budget Minutes June 25, 2002 Page Six

Mr. Shupe advised a quote had been received late this afternoon from Allianz, which is a big company. Under renewal 1, the premium was $376,000. Under renewal 1a, the premium was $320,000, under renewal 2, the premium was $300,000. Under renewal 2a the premium was $250,000.

Mr. Shupe advised although the amount of coverage has been lowered, it was still on a blanket basis. He stated something would have to happen in Rutherford County in one occurrence that would destroy more than $200,000,000 or $100,000,000 worth of Rutherford County’s property at one time.

Mr. Ken Halliburton advised there was one property loss in the county last year, that being the County Clerk’s Office in Smyrna.

Mr. Shupe advised there was a $10,000,000 sub-limit for flood and earthquake under Allianz.

Mr. Halliburton stated that even though the county previously carried $518,940,943 in coverage, the possibility of losing all of that at any one time was highly remote. He stated previously insurance carriers, from a re-insurance standpoint, did not have a problem with how much would occur at any one time and how much exposure they had. He stated that has changed since September 11. He advised terrorism is excluded from the Travelers’ policy and terrorism is at $1,000,000 sub-limit with the Allianz quote.

Mr. Halliburton stated another thing taken into consideration is the county’s past loss history. With a $100,000 deductible, that would have eliminated 98% of all of the property claims the county has ever had. He asked if there was more than $100,000,000 of exposure for any one peril? He stated the worst case scenario was a tornado.

Mr. Shupe stated he would recommend the $100,000,000 limit coverage with $100,000 deductible through Allianz. He stated he believed it was the most cost effective for the county. The difference in premium between this coverage and the $200,000,000 with a $25,000 deductible was $126,000 less. He stated the county has a lot of control on what happens with the property coverage through good loss control, through maintenance, through safety, etc.

Mr. Halliburton advised on the liability insurance side, several insurance companies would have bid on the property and liability insurance as a package, but would not write the sexual harassment coverage due to the number of claims the county had during the past year. One carrier, due to the sexual harassment claims and some larger liability claims, wanted no less than a $200,000 deductible.

Following discussion, Comm. Jones moved, seconded by Comm. Peay to approve the 2002-2003 property insurance renewal through Allianz with an insurance limit of $100,000,000 and a $100,000 deductible and a premium cost of $250,000.

The motion passed unanimously by roll call vote.

Relative to the Boiler Insurance, Mr. Shupe advised there was no change, and the renewal is the same through Cincinnati for coverage of $8,000,000 and a deductible of $1,000. The premium is $11,704.

Comm. Sandlin moved, seconded by Comm. Throneberry to approve the renewal through Cincinnati for the Boiler Insurance with insurance coverage of $8,000,000, deductible of $1,000 and an annual premium of $11,704.

The motion passed unanimously by roll call vote.

Relative to the Crime Insurance, Mr. Shupe advised he has not yet received the renewal. He stated if it was going to be an increase of more than 25%, the insurance company has to give a 60-day notice, which cannot be done. Currently, the crime insurance coverage is through Great American for coverage of $500,000, a deductible of $5,000, and an annual premium of $6,097.

Budget Minutes June 25, 2002 Page Seven

Mr. Shupe noted that even if the company increased the premium by 25%, that would be approximately $7,600.

The committee agreed to take no action on the Crime Insurance until next month after the renewal is received.

Relative to the Casualty Insurance, Royal, the current carrier, was the only bid presented. Mr. Shupe explained the current per occurrence limit is $2,000,000, and the general aggregate is $6,000,000 with a $25,000 deductible. The Errors and Omissions Aggregate was $2,000,000. The aggregate of all of the deductibles is $650,000. There was a $1,000 maintenance deductible, which means once the $650,000 aggregate deductible is reached, the deductible is $1,000. The auto comprehensive deductible was $250/$1,000, and the auto collision deductible was $500/$1,000. The current premium was $548,752.

Mr. Shupe advised the renewal is not an exact comparison, because Royal would not offer what the county currently has.

The per occurrence limit has been reduced from $2,000,000 to $1,000,000. The aggregate has been reduced from $6,000,000 to $5,000,000. The deductible is $50,000. The Errors & Omissions Aggregate has been reduced from $2,000,000 to $1,000,000. The aggregate Stop Loss limit has almost doubled from $650,000 to $1,200,000. All of the deductibles on the vehicles have gone to $500/$1,000. The annual premium is $930,296, which is almost a 70% increase.

Royal provided an option with the deductible going from $50,000 to $100,000 for an annual premium of $726,334, which is an increase of 32.4%.

Mr. Halliburton stated in the past year, there were 11 claims that would have easily gone over the $50,000 deductible.

Mr. Shupe advised the committee the county was under the State Tort liability law, which just increased. He stated if a claim is settled in State court, the coverage is capped.

Mr. Halliburton explained the sexual harassment claims are federal court cases, and they would not come under the tort limits.

Mr. Halliburton advised Royal did not want to provide sexual harassment coverage at renewal. He stated he explained to Royal that the county had a Human Resource Director in the 2002-2003 budget. Mr. Halliburton stated that was the main reason Royal was willing to include sexual harassment coverage at this time. He reported Royal believed the county was trying to take corrective action.

Mr. Shupe advised it was very important that the county put more emphasis on loss control and education. He stated whatever is currently being done on loss control, it needs to be doubled.

Comm. P. Johnson asked Mr. Shupe if his recommendation would be to renew with Royal at the second option with a per occurrence limit of $1,000,000, a deductible of $100,000 and an annual premium of $726,334?

Mr. Shupe advised he would recommend option one with the per occurrence limit of $1,000,000, a deductible of $50,000, and an annual premium of $930,296. He stated the difference in the premium is $200,000, but that would be equivalent to four claims, and last year there was 11 claims.

The Finance Director advised the annual premium is split among the General Fund, Solid Waste Fund, Road & Bridge Fund, and the General Purpose School Fund. He explained Mr. Halliburton provides the breakdown of the annual premiums by the funds.

Budget Minutes June 25, 2002 Page Eight

Comm. P. Johnson stated he wanted to be optimistic about the insurance claims, and he did not believe the county would experience that number of claims next year.

Following discussion, Comm. P. Johnson moved seconded by Comm. Sandlin to approve the 2002-2003 casualty renewal with Royal with a per occurrence limit of $1,000,000, a general aggregate of $5,000,000, and a per occurrence deductible of $100,000 for an annual premium of $726,334.

The motion passed by roll call vote with Commissioners Ealy, P. Johnson, Jones, Peay, Sandlin, and Throneberry voting “yes”, and Commissioner Evans voting “no”.

Relative to the Worker’s Compensation Insurance, there were four quotes through the county’s agent, Murfreesboro Insurance Agency.

The current Worker’s Compensation Insurance utilizes Brentwood Services as the third party administrator with reinsurance specific excess provided by Safety National with the employers liability of $500,000 and specific retention of $250,000. The Worker’s Compensation Bond is $5,250, the administration fee is $48,000, the loss control fee is $11,500, and the agent fee is $5,000. The total fixed cost is $113,300.

Mr. Shupe advised he was recommending the renewal with Brentwood Services as the third party administrator, Safety National as the reinsurer, the specific retention is the same at $250,000. The reinsurance premium would increase from $43,550 to $54,686, and the administration fee would increase from $48,000 to $50,000. The total fixed cost is $126,436, which is an 11.6% increase.

Following discussion, Comm. Peay moved, seconded by Comm. Throneberry to approve the 2002-2003 Worker’s Compensation renewal through Murfreesboro Insurance Agency with Brentwood Service as the third party administrator, and Safety National as the reinsurer. The employer’s liability is $500,000, the specific retention is $250,000, the reinsurance premium would increase from $43,550 to $54,686, the Worker’s Compensation Bond would be $5,250, the administration fee would increase from $48,000 to $50,000, the loss control would be $11,500, the agent fee is $5,000, and the total fixed cost would be $126,436.

The motion passed unanimously by roll call vote.

Comm. Peay stated he would like to have some information by the time the County Commission meets on Thursday morning on what would happen if the committee had voted to approve Comm. Sandlin’s amendment to approve the renewal with William C. Beeler at the current rate and no increase to the administrative fee. He wanted to know if the county would be in a position to negotiate that.

Mr. Shupe advised he would not be able to attend the County Commission meeting on Thursday, but would have someone attend with the authority to discuss it.

APPROVE RESOLUTION TO AMEND CHAMBER OF COMMERCE ALLOCATION FROM HOTEL/MOTEL TAX:

Finance Director Paul Long presented a resolution to amend the Chamber of Commerce allocation from the Hotel/Motel Tax as a result of action the committee took when Mr. Benefield addressed the committee regarding the Convention/Visitors Bureau.

The committee approved to increase the allocation of the hotel/motel tax from 20% to 30% for the Chamber of Commerce, and the resolution reflects that action.

Comm. P. Johnson moved, seconded by Comm. Throneberry to approve the resolution increasing the allocation of the Hotel/Motel Tax from 20% to 30% for the Chamber of Commerce and forward the same to the full commission.

Budget Minutes June 25, 2002 Page Nine

The motion passed unanimously by roll call vote.

APPROVE FUND BALANCE POLICY:

The Finance Director requested approval of a resolution establishing a Fund Balance Policy for the General Fund and the General Debt Service Fund as previously discussed by the committee. He advised the policy is exactly the same, and there have been no changes.

The Fund Balance Policy requires the undesignated fund balance for the General Fund will be maintained at a level sufficient to provide for the required resources to meet operating cost needs, to allow for unforeseen needs of an emergency nature, and to permit orderly adjustment to changes resulting from fluctuations of revenue sources. Rutherford County will maintain at least 15% of the next year’s budget in the undesignated fund balance of the General Fund.

The General Debt Service Fund undesignated fund balance will be maintained at a level sufficient to ensure that the county’s obligation to pay legal debt requirements is met, and to permit orderly adjustment to changes resulting from fluctuations of revenue sources. Rutherford County will maintain at least 75% of the next year’s budget in the undesignated fund balance of the General Debt Service Fund.

The committee discussed that any funds remaining over the 15% could be maintained separately and invested separately. The interest earnings on that money could be allocated.

The Finance Director advised that currently the interest earnings on all idle county balances are allocated based on percentage to the General Purpose School Fund, General Fund, Debt Service and Road & Bridge Fund. He recommended not changing the interest allocation at this time.

Following discussion, Comm. P. Johnson moved, seconded by Comm. Throneberry to approve the Resolution Establishing a Fund Balance Policy for the General Fund and the General Debt Service Fund as presented.

The motion passed unanimously by roll call vote.

2002-2003 TAX LEVY RESOLUTION:

Finance Director Paul Long presented the 2002-2003 Tax Levy Resolution for approval. The Tax Levy Resolution reflects the certified property tax rate of $2.51.

The resolution also deals with the allocation of the sales tax revenue, wheel tax revenue and interest earnings on idle funds. Mr. Long advised these allocations are the same as last year.

Comm. Sandlin stated he had been questioned about having a backup plan if the State does not approve their budget.

Chairman Evans stated the county could adopt a continuation budget as the City of Murfreesboro has done. He stated there would be as much work involved in coming back and changing the numbers as there would be if the County Commission takes action based on what is known now. He stated there are a lot of things being talked about and nothing is certain. However, based on what the county received last year, the budget has been proposed based on what is known. He stated he believed it adds justification to a state income tax in the minds of the people if the county is not willing to act.

Chairman Evans advised the City of Murfreesboro has sent a letter to the county stating if the State withholds their portion of State-Shared revenue, the City would request to withhold from the County their portion of the increased sales tax from the county.

Chairman Evans stated since the committee did not know what was going to happen, he believed they should move forward. He stated the committee might have to reconvene in July. He stated he believed adopting a continuation budget scares the public.

Budget Minutes June 25, 2002 Page Ten

The Finance Director stated he feels strongly the budget should be adopted as proposed unless the State does something drastic between now and Thursday morning. He stated if that is the case, he would probably not be able to evaluate and interpret what the State has done that quickly. He advised he had a continuation budget resolution ready to present on the floor of the commission if necessary. Mr. Long explained that if the commission attempts to amend the tax levy on the floor of the commission and is successful, the commission would have to adjourn,

advertise for a public hearing and hold a public hearing before the tax levy could be officially increased. He stated if that happened, he believed the continuation budget resolution would need to be prepared and ready to present.

Mr. Long explained if a continuation budget is adopted, it says the county can spend dollars and operate. He stated the key word is “operate”, and no capital items can be purchased. He stated it might mean that the sheriff would miss his window for ordering patrol cars. By the same token, if the proposed budget is approved, the county is effectively awarding a 3% pay increase to county employees.

Chairman Evans stated there is absolutely nothing that the county commission cannot come back and undo or change. He stated he believed the committee and the commission should go forward based on what is known.

Mr. Sandvig stated a concern at the School Board would be some of the positions that have been abolished are not funded in the approved 2002-2003 budget. However, a continuation budget would have funding for the positions, and he believed this would create a legal problem.

Following discussion, Comm. Throneberry moved, seconded by Comm. P. Johnson to approve the 2002-2003 Resolution Fixing The Tax Levy at the certified tax rate of $2.51.

The motion passed unanimously by roll call vote.

2002-2003 APPROPRIATION RESOLUTION:

The Finance Director advised if the committee wished to make any changes to any of the budgets discussed during the past few weeks, this would be the time to do it.

Comm. Jones asked about the Human Resource Director and if it was in the budget.

The Finance Director explained it is funded in the Personnel Office category. He stated that previously the committee established a selection process. He explained the issue was raised at the Steering Committee if it was legal to select the position in that manner since it was a department head. Mr. Long stated the position was currently being proposed in the budget as a separate department category.

Chairman Evans stated the point that was made at the time the Human Resource Director was approved was that the individual should answer to the full commission the same as the Finance Director.

The Finance Director stated it was his understanding that CTAS has stated that a Private Act had to be approved in order to do that.

Comm. Jones asked if that would do away with the structure that the Budget Committee approved to select the position?

The Finance Director stated that was his understanding.

Comm. Jones stated one of the main points was that the position be independent. She stated the position, like the Finance Director, should be responsible to 21 people instead of one. She stated if it is structured so that there has to be a Private Act, it could not be done until January. She stated judging from what was presented during the insurance discussion, she would like to have

Budget Minutes June 25, 2002 Page Eleven

some feedback from the committee relative to proceeding on as soon as the budget is adopted. She stated there needed to be a safeguard in place through a Human Resource Director.

Chairman Evans stated the committee voted to have the selection committee be made up of the Chairmen and Vice Chairmen of the Budget Committee and the Steering Committee, the Finance Director, and the County Executive as Ex-Officio. He stated if the position is hired the way

CTAS has stated, the County Commission still has to confirm it, but they would lose their ability to interview and sit in on the interview process.

Comm. Peay stated he believed the Steering Committee should be the committee reviewing this. He stated the Steering Committee would have the ultimate say on whether the County Executive hires the position or whether the Budget Committee hires the position.

Comm. P. Johnson noted that the County Attorney is to be at the August Steering Committee meeting to discuss the appointment of the Human Resource Director.

Chairman Evans stated he did not believe the members of the Steering Committee were aware of what was reported during the insurance discussion, and how important it is to hire a Human Resource Director as soon as possible. He stated if it was delayed until January, there could be a problem with the insurance coverage.

Comm. Jones stated she did not believe the county could wait until January to fill the position. She stated that perhaps they should let the commission decide on Thursday how the position would be filled. She stated if the money is in the budget, they should proceed on. She stated when the grant coordinator’s position was created, that could have been a department head. She stated they elected that position to come under the Finance Director. She stated perhaps this position should, as well, at least until they can institute a Private Act.

Comm. Peay stated he did not believe the Human Resource Director should work under another Department Head that they would be overseeing. He stated he needed more information.

Comm. Jones stated the question at hand was if the position would be a department head. She stated there is no law prohibiting the hiring of a Human Resource Director.

Comm. Ealy stated there needed to be some structuring or some limiting parameters before it is presented to the County Commission.

Comm. Peay stated by the Budget Committee trying to decide how the position is to be filled, it is taking away the Steering Committee’s prerogative to do it. He stated the recommendation should come from the Steering Committee, and he did not want to supercede that.

Chairman Evans stated there was no effort to supercede the Steering Committee. He stated the position was proposed as a part of the budget process, and the Steering Committee did not send it to the Budget Committee prior to the budget process.

Comm. Throneberry stated he believed the position should be independent. He stated pay raises have been given on the commission floor when they should not have done that.

Comm. Jones stated each commissioner has to decide if the Human Resource Director would be accountable to the full commission or the County Executive. She stated in order to do that, a Private Act has to be created. She stated that could not be done until January. She stated the next question would be if the commission wanted to wait until January to fill the position. She stated she did not. She stated she wanted the committee to consider that the Human Resource Director be hired and work under the Finance Director, because the Finance Director is accountable to the County Commission. She stated she believed it defeats the whole purpose if the Human Resource Director is accountable to only one person. She stated she wanted to know before she voted to fund the position if the position was going to be totally independent.

Budget Minutes June 25, 2002 Page Twelve

Comm. P. Johnson wanted to know why a separate resolution could not be made on the commission floor regarding this as a stop gap measure to address the funding and that the person would work in conjunction with the Finance Director until such a time that a Private Act could be established.

The Finance Director stated he did not want permanent full time responsibility for H.R. He stated, as previously reported, the Finance Department staff would help train the person until they can get going on their own. He stated he would be willing to help if it was something the committee wanted him to do until a Private Act could be adopted.

Chairman Evans stated the County Attorney should be notified to prepare to have an opinion ready on Thursday morning.

The committee discussed by the time the position was advertised and the interview process was conducted, it would probably be October or November before someone could be hired. The committee discussed advertising locally, as well as in the Tennessean and on the county’s website.

The Finance Director stated there are some publications that all public officials receive such as the NACO Newsletter and County News.

Mr. Jeff Sandvig, Assistant School Superintendent, provided the committee with the detailed line items of the 2002-2003 General Purpose School Fund budget reflecting the Budget Committee’s recommendation of $140,154,950.

RECOMMENDATION FOR FUNDING FOR VARIOUS SCHOOL ROOFS:

Chairman Evans advised there was so much discussion on the roofs, but the roofs need to be addressed. He stated he believed it was important that the committee rectify the problem. He stated he believed they needed to take care of what the county has. He stated he appreciated what Mr. Sinclair had stated at the last meeting.

He stated when the estimate of the Oakland and Riverdale HVAC system was given, it was estimated it would cost $3 million. He advised the bid came in at about half of what was estimated. He stated that after the county funded it at $3 million, the School Board looked at alternative measures of heat and air. He stated he would have preferred to fund it after the research was completed. He stated he appreciated the fact that it is going to save money, but at the same time the county has already borrowed the $3 million. He stated he wanted to ask that the committee consider that the School Board obtain firm estimates for the roof repairs, and that they request the School Board to look at alternative sources, such as the spray-on. He stated if the committee could get a hard number, then they have to repair the roofs.

Chairman Evans stated he wanted to build more schools and purchase more property, and he wanted to see that the children have every opportunity. The county has to take care of what they have first.

Comm. Sandlin stated one thing he disagreed with Mr. Sinclair on was cold tar pitch roofs. He stated there are many different types of roofs available. He stated the mixed emotion that he had was that the School Board has been aware of the roof situations for some time, and it was not a priority until the last minute before the budget was adopted.

Chairman Evans stated he would like to conceptually adopt a motion that states as soon as the best possible estimates are received, with a few different alternatives proposed, he would like to fund the repairs. He stated he was not talking about doing a six-month study, but Mr. McLaughlin is not a roof expert. He stated he does not want to stop the roof repairs that have already been approved and the bids have been opened and the process started. However, for the other schools, he wanted the School Board to get firm estimates.

Budget Minutes June 25, 2002 Page Thirteen

The Finance Director stated the total cost would be $2,830,000 above what has already been funded. He stated the committee would also probably want to consider the door replacements per the Fire Marshall and the fire safety items for Central Middle, McFadden, and Buchanan at a cost of $160,000. He explained if the committee was going to consider a potential bond issue, those items should be included.

Mr. Sandvig stated the Board is still not sure the La Vergne High School roof could be repaired for $900,000.

Chairman Evans resigned the chair to make a motion and turned the meeting over to Vice Chairwoman Ealy.

Comm. Evans moved, seconded by Comm. Throneberry that the Budget Committee agree that after the School Board receives firm estimates, which include alternative proposals, to fund the roof repairs capped at the current recommendation including the fire doors and the fire safety items for Central Middle, McFadden and Buchanan Schools and that prior to September 1, if necessary, the Budget Committee will meet to fund the repairs.

It was noted that the motion did not include the Buchanan mechanical system at $750,000.

Comm. Jones moved to amend the motion, seconded by Comm. Sandlin that the original motion be approved provided that the Board of Education would commit to using money that is left over from the HVAC funds at Oakland and Riverdale and the Siegel High School project.

Mr. Sandvig noted the amount left over in the Siegel High construction account would be approximately $500,000, and there might be some change orders relative to the HVAC project at Oakland and Riverdale.

The Finance Director stated he has talked to Mr. Watson about this funding concept, and he is in the process of talking to the School Board members.

Following discussion, the amendment to the motion to approve the original motion subject to the Board of Education committing to using money that is left over from the HVAC funds at Oakland and Riverdale and the Siegel High School project passed unanimously by roll call vote.

The original motion to commit to funding, capped at the current recommendation, for the roof repairs, including fire doors and fire safety items at Central Middle, McFadden and Buchanan once firm estimates are received and alternative proposals provided and that the Budget Committee will meet prior to September 1, if necessary, to approve the funding passed unanimously by roll call vote.

ADJOURNMENT:

There being no further business to be presented, Chairman Evans declared the meeting adjourned at 9:30 P.M.

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Elaine Cawthon, Secretary

Agenda